China Natural Gas, Inc.

CIK:0001120830|SEC Filings

Earnings per Share

9 Months Ended

Sep. 30, 2013

Note 11 – Earnings per Share

The following is a calculation of basic and diluted earnings per common share:

	For the three months ended				For the nine months ended
	September 30,				September 30,
	2013		2012		2013		2012
Basic earnings per share
Net income	$	713,507	$	(1,523,597)	$	8,494,648	$	5,697,914

Weighted shares outstanding-Basic		21,458,654		21,458,654		21,458,654		21,458,654

Earnings per share-Basic	$	0.03	$	(0.07)	$	0.40	$	0.27

Diluted earnings per share

Net income	$	713,507	$	(1,523,597)	$	8,494,648	$	5,697,914

Weighted shares outstanding-Basic		21,458,654		21,458,654		21,458,654		21,458,654
Effect of diluted securities-Warrants		-		-		-		-
Effect of diluted securities-Options		-		-		-		-
Weighted shares outstanding-Diluted		21,458,654		21,458,654		21,458,654		21,458,654

Earnings per share –Diluted	$	0.03	$	(0.07)	$	0.40	$	0.27

The Company had outstanding warrants of 1,450,000 as of September 30, 2013. For the three and nine months ended September 30, 2013, all 1,450,000 outstanding warrants were excluded from the diluted earnings per share calculation as the exercise price was greater than the average stock price during these periods. The Company had outstanding warrants of 1,833,654 as of September 30, 2012. For the three and nine months ended September 30, 2012, all 1,833,654 outstanding warrants were excluded from the diluted earnings per share calculation as the exercise price was greater than the average stock price during these periods.

The Company had 218,450 outstanding employee stock options as of September 30, 2013 and 2012. For the three and nine months ended September 30, 2013 and 2012, the outstanding options were excluded from the diluted earnings per share calculation as the exercise price was greater than the average option price during these periods.

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	9 Months Ended
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	Sep. 30, 2013	Sep. 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income attributable to China Natural Gas, Inc.	$ 8,494,648	$ 5,697,914
Add: income (loss) attributable to noncontrolling interests	72,844	(175,589)
Net income	8,567,492	5,522,325
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	10,757,202	10,443,635
Provision for doubtful accounts	50,970	200,984
Loss on disposal of equipment	57,654	4,017,726
Loss on sales of long term investment	80,500	0
Stock-based compensation	148,038	444,114
Change in fair value of warrants	0	(4)
Change in assets and liabilities:
Accounts receivable	(553,131)	1,067,790
Other receivables	(301,293)	170,241
Employee advances	72,453	(526,366)
Inventories	(465,213)	(1,365,120)
Advances to suppliers	(8,101,755)	(2,458,489)
Prepaid expense and other current assets	(890,060)	3,049,626
Accounts payable and accrued liabilities	3,158,456	325,648
Unearned revenue	1,697,655	1,176,182
Accrued interest	1,383,772	440,838
Taxes payable	(1,046,317)	(1,432,165)
Net cash provided by operating activities	14,616,423	21,076,965
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for acquisition of property and equipment	(1,649,846)	(4,129,677)
Proceeds from sales of property and equipment	7,209	2,850,914
Proceeds from sales of long term investment	724,500	(13,107,944)
Additions to construction in progress	(11,894,106)	(418,295)
Prepayment on long-term assets	(239,593)	(656,179)
Payment for acquisition of business	0	(1,768,049)
Payment for intangible assets	0	0
Net cash used in investing activities	(13,051,836)	(17,229,230)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of short-term borrowing and other payable, related parties	(805,000)	0
Repayment of long-term debt	(1,610,000)	(792,500)
Repayment of senior notes	0	(3,333,334)
Increase in restricted cash	0	(740,084)
Net cash (used in) provided by financing activities	(2,415,000)	(4,865,918)
Effect of exchange rate changes on cash and cash equivalents	327,409	206
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(523,004)	(1,017,977)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	10,857,456	9,622,883
CASH AND CASH EQUIVALENTS, END OF PERIOD	10,334,452	8,604,906
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid, net of capitalized interest	417,884	718,541
Income taxes paid	2,009,997	3,330,382
Non-cash transactions for investing and financing activities:
Construction in progress transferred to property and equipment	33,786,303	19,380,905
Capitalized interest - amortization of discount of notes payable and issuance cost	0	6,107,601
Construction material
Non-cash transactions for investing and financing activities:
Transferred to Construction in Progress	0	67,058
Other assets
Non-cash transactions for investing and financing activities:
Transferred to Construction in Progress	$ 126,957	$ 2,577,107

CONSOLIDATED BALANCE SHEETS (USD $)	Sep. 30, 2013	Dec. 31, 2012
CURRENT ASSETS:
Cash and cash equivalents	$ 10,334,452	$ 10,857,456
Accounts receivable, net	2,714,988	2,148,379
Other receivables, net	346,234	458,605
Employee advances	336,286	399,031
Inventories	3,011,956	2,473,933
Advances to suppliers	11,187,066	4,869,606
Prepaid expense and other current assets	4,558,512	3,541,431
Total current assets	32,489,494	24,748,441
Investment in unconsolidated joint ventures	0	1,587,000
Property and equipment, net	210,683,183	179,515,563
Construction in progress	34,821,916	53,393,933
Goodwill	862,561	839,806
Other intangible assets	21,176,688	21,400,924
Prepaid expenses and other assets	7,463,106	7,015,142
TOTAL ASSETS	307,496,948	288,500,809
CURRENT LIABILITIES:
Senior notes- current maturities	38,908,332	38,352,498
Current portion of bank loan payable	4,890,000	4,761,000
Redeemable liabilities - warrants	17,500,000	17,500,000
Accounts payable and accrued liabilities	9,281,250	6,756,278
Other payable - related party	845,226	1,616,429
Short-term borrowing - related party	2,679,945	2,679,945
Unearned revenue	5,481,579	3,663,570
Accrued interest	3,320,356	1,936,584
Taxes payable	1,233,722	2,232,546
Total current liabilities	84,140,410	79,498,850
LONG-TERM LIABILITIES:
Bank loan payable, net of current portion	3,260,000	4,761,000
Long-term payables	313,913	0
Total long-term liabilities	3,573,913	4,761,000
Total liabilities	87,714,323	84,259,850
STOCKHOLDERS' EQUITY:
Preferred stock, par value $0.0001 per share, 5,000,000 authorized, none issued and outstanding	0	0
Common stock, par value $0.0001 per share, 45,000,000 authorized, 21,458,654 issued and outstanding at September 30, 2013 and December 31, 2012, respectively	2,145	2,145
Additional paid-in capital	83,649,675	83,501,637
Accumulated other comprehensive income	28,103,067	21,276,931
Statutory reserves	12,955,189	11,818,087
Retained earnings	94,768,161	87,410,615
Noncontrolling interests	304,388	231,544
Total stockholders' equity	219,782,625	204,240,959
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 307,496,948	$ 288,500,809